UPS hopes China ads deliver

UPS may spend as much as USD 60 million this time on Olympics-related activities from ads to hospitality, says Jim Andrews, Editorial Director of the IEG Sponsorship Report.

For UPS, making a good impression during the Games is crucial. The company believes China’s appetite for American products will grow exponentially in coming years, driving the market for deliveries across the Pacific and within Asia. In 2006, it conducted a survey of what it identified as 1,200 “middle-class consumers” in six Chinese cities. The findings suggested growing demand for U.S. products ranging from beauty products to DVDs.

In China, UPS is competing fiercely with FedEx Corp.UPS has had to play catch-up since 1995, when FedEx acquired what were the only existing rights to make all-cargo flights directly to China from the U.S. In 2005, FedEx also became the first express carrier with a direct flight from mainland China to Europe.

Before 2004, the Chinese government permitted 20 cargo-only flights a week by American companies between the U.S. and China. But that is scheduled to increase to 131 flights a week by 2010 as China eases its restrictions, according to Robert Dahl, Project Manager of Air Cargo Management Group, a Seattle-based aviation consulting firm.

FedEx and UPS, which each have about 6,000 workers in the country, are building new airport hubs in China that are set to open later this year — UPS’s in Shanghai and FedEx’s in Guangzhou. UPS is also competing against DHL and TNT. One of the busiest Olympic sponsors this year is a U.S. company whose TV ads won't be seen by American audiences. In a shift from previous Games, United Parcel Service Inc. is advertising only in China, a market the company calls "our next great frontier."

In recent weeks, UPS's ads have become ubiquitous in China, showing up on buses and subways, on TV and radio, and on the luggage carousels at Beijing International Airport. The tagline on the billboards targets China's emerging business managers: "If UPS can fully assist the Beijing 2008 Olympics, they can fully assist you."

The slogan refers to UPS's role as the official Olympic sponsor of express and logistics services, which makes it responsible for getting every piece of equipment associated with the Games — from ping-pong balls to the flooring for the gymnastics competitions — where it needs to go.

UPS has been planning for this for three years, timing all the traffic lights along its Beijing delivery routes and measuring the height and width of every bridge, tunnel and overpass. The company estimates it will have handled 19 million pieces of equipment and other items by the end of the Games, using resources that include 2,000 employees and 217 trucks.

By focusing on China, says Joseph Guerrisi, the Asia-based vice president of marketing, UPS aims to reach, among others, small- and medium-size Chinese companies that could take off in the near future, including businesses in the electronics, garment and pharmaceutical industries.

UPS's arrangement with the Beijing Games is a big departure from the company's involvement in past Olympics, including the 1996 Summer Games in Atlanta, the 1998 Winter Games in Nagano, Japan, and the 2000 Summer Games in Sydney, Australia. During those Games, UPS was in the highest echelon of sponsors with global advertising rights.

Nonetheless, UPS may spend as much as USD 60 million this time on Olympics-related activities from ads to hospitality, says Jim Andrews, editorial director of the IEG Sponsorship Report, a Chicago-based newsletter that tracks corporate sponsorships. UPS, which will also provide some Olympics services free as part of its sponsorship agreement, declines to disclose its costs. Its ads were produced by Interpublic Group's McCann Erickson in Chinese or English, depending on the medium and the target audience.

For UPS, making a good impression during the Games is crucial. The company believes China's appetite for American products will grow exponentially in coming years, driving the market for deliveries across the Pacific and within Asia. In 2006, it conducted a survey of what it identified as 1,200 "middle-class consumers" in six Chinese cities. The findings suggested growing demand for U.S. products ranging from beauty products to DVDs.

In China, UPS is competing fiercely with FedEx Corp., the other U.S. giant of express shipping. UPS has had to play catch-up since 1995, when FedEx acquired what were the only existing rights to make all-cargo flights directly to China from the U.S. In 2005, FedEx also became the first express carrier with a direct flight from mainland China to Europe.

Before 2004, the Chinese government permitted 20 cargo-only flights a week by American companies between the U.S. and China. But that is scheduled to increase to 131 flights a week by 2010 as China eases its restrictions, according to Robert Dahl, project manager of Air Cargo Management Group, a Seattle-based aviation consulting firm.

FedEx and UPS, which each have about 6,000 workers in the country, are building new airport hubs in China that are set to open later this year — UPS's in Shanghai and FedEx's in Guangzhou. UPS is also competing against DHL, the express-delivery unit of Germany's Deutsche Post AG, and against the Dutch postal and express company TNT NV.

FedEx officials say UPS's visibility during the Games doesn't worry them. FedEx "has been in China for a long time and will be in China for a long time," says Rajesh Subramaniam, senior vice president of international marketing. He notes FedEx was heavily involved in relief efforts after the May earthquake in western China.